The podcast industry is growing quickly, and advertisers are paying attention. Selling advertising is one popular way to monetize a podcast.
Even if you don’t have your own show, you can take advantage of the expanding market by acting as a liaison to facilitate sales between podcasts and advertisers.
Podcasters can sell advertising space on their shows in a few different ways. There are podcast ad networks that act as a marketplace for podcasts and businesses; typically, these services take a cut of the sale.
Shows can also negotiate with brands on their own. Familiarize yourself with similar podcasts and pay attention to the advertisers on their shows. This will give you a good starting point for brands to approach. If your show has a larger following, sometimes advertisers will come to you.
Advertisements are typically sold by CPM, which stands for cost per mille, or cost per 1,000 listeners. Ad buying platform AdvertiseCast lists the going industry average rates for podcast advertising at $18 per 30-second ad CPM and $25 per 60-second ad CPM.
CPA, which stands for cost per acquisition, is another metric for podcast ad sales. This is results-dependent and calculated based on the number of sales or sign-ups an advertisement creates.
Some advertisers might prefer a mix of the two methods, or want to negotiate a completely different option.
Why Sell Advertising on a Podcast?
Fifty-four percent of podcast consumers say they’re more likely to consider brands they hear advertised on podcasts, as opposed to the 7% who say they’re less likely, according to “The Podcast Consumer 2019,” a report by Edison Research and Triton Digital.
But when starting a new podcast, focus on building your audience first, rather than pursuing a sponsor right away. Creating a dedicated following will, in turn, attract advertisers. Uploading your podcast on big platforms like Spotify and Apple Podcasts can help to expand your audience. These outlets provide marketing tools and resources, and can increase accessibility for smaller podcasts.
Audience size, usually measured by downloads per episode, is often the biggest draw for advertisers. The demographic of listeners, the type of show, and audience engagement are also taken into consideration.
AdvertiseCast recommends that podcasts have at least 10 episodes published with a minimum of 5,000 listeners per episode before pursuing sponsors.
When deciding what advertisements to feature on your show, make sure your first priority is staying true to your podcast identity. Don’t work with brands that aren’t cohesive with your message. You never want to risk jeopardizing the trust of your audience.
While advertising is a well-known podcast income source, there are numerous other ways to generate revenue in the industry. Money-makers like affiliate marketing, selling branded merchandise, or relying on crowdfunding can all be effective options. We’ll dive more into these other types of income later on.
How to Sell Advertising for Your Podcast
There are two main types of podcast advertising—host-read, or dynamically inserted ads.
For host-read ads, the advertiser will usually provide key talking points, and let the host fill in the rest of the dialogue, so that it doesn’t sound too scripted. Depending on the product, there may be some parts that must be read verbatim, such as a legal disclaimer. If the sponsorship includes an endorsement, the company usually sends the host a product sample to try so that they’re able to speak candidly about their experience.
Host-read ads are “baked-in,” which means that listeners will hear the same ad regardless of where they are, and unless someone edits the original audio, the commercial will always be there.
Dynamically inserted ads are pre-produced commercials that are added to a show from an ad server. Listeners often hear different commercials as advertisers target specific demographics or locations.
Advertisements are usually placed in the beginning (pre-roll), middle (mid-roll), or at the end of an episode (post-roll). Pre- and post-roll placements tend to be cheaper and shorter, lasting about 15-30 seconds. Mid-roll ads typically cost more, and can run as long as a minute. Longer shows might include a couple of mid-roll ad spaces.
Selling advertising on podcasts works best for shows that aren’t already trying to promote their own products or services.
You don’t need to have your own show to take advantage of the advertising opportunities available. You can create a full-time job out of negotiating ad sales between podcasts and sponsors, either working for a marketplace or individually.
Alternatives to Podcast Advertising
There are lots of other ways to make money through podcasting, many of which you can pursue with a smaller audience.
Many podcasts participate in affiliate marketing programs. When hosts mention a product on their show they provide a unique URL, often giving the audience a discount. When listeners make a purchase using that code, the podcast gets a cut of the sales.
In lieu of advertisements, some podcasts prefer to charge listeners to subscribe to the show, or offer their audience access to ad-free content for a premium.
Crowdfunding platforms like Patreon give listeners the opportunity to donate in return for perks such as exclusive content or early-episode access.
Podcasts with a dedicated audience also can make extra income through sales of branded merchandise or offering tickets to live shows or events.
Hosting a podcast is a great way to assert your expertise in a field. Monetize your knowledge through public speaking gigs or create a course. You also can sell your services as a podcast consultant or producer or by helping new podcasters learn the ropes.
How Much Money Can Advertising Make?
While Bloomberg Businessweek reported that several top podcasts making more than $1 million a year, don’t expect to start earning the big bucks right away. Most podcasts take a long time to establish an audience base and advertisers.
How much you earn from podcast advertising is based on three main factors—episode CPM, the number of episodes produced each month, and how many episode downloads you’re getting. The website Improve Podcast gives the following formula to calculate your estimated income:
Monthly income = episode CPM x number of episodes per month x number of downloads / 1000.
Once you start working with advertisers, experiment with selling different-length ads in different places in your show to find the most effective combination for your podcast.
This calculator from AdvertiseCast gives you an estimate of how much advertising income you can expect to make from your podcast.
The Bottom Line
Advertising can be a key revenue source for your podcast. The first step to attracting sponsors is to focus on building your audience. Big platforms like Spotify and Apple Podcasts can be a good place for new shows to find resources and increase accessibility.
Make sure to be realistic with your expectations—growing an audience, gaining their trust, and attracting advertisers takes time and effort. When you’re ready to pursue sponsorships, you can join a marketplace through an ad network, or approach brands independently.
Even if you don’t have your own podcast, you can earn extra income by selling advertisements for other shows, either on your own, or through an agency.